The rivalry between ride-sharing apps Uber and Lyft was moving to a new level of intensity on Wednesday, as Uber prepared to publish paperwork for an initial public offering that could value it at $100bn and newly-listed Lyft’s shares plunged further below their offer price.
After a near-11 per cent fall on Wednesday, Lyft shares closed at $60.12, more than 16 per cent lower than its IPO price of $72 on March 28, giving the company a market capitalisation of $16.4bn.
Uber is expected to make public its IPO prospectus on Thursday, giving investors the opportunity to more closely judge the two companies side by side. Uber aims to raise $10bn with its listing.
The company has given a hint about its expectations for the IPO in information provided to holders of its convertible debt, it emerged on Wednesday. It told them that it could price its shares in a range of $48 to $55 apiece, according to people with knowledge of the situation. That would give it a valuation of between $90bn and $100bn, the people said.
The range could tighten or change depending on market conditions and investor demand, however, as its listing nears. A formal price range will be set later this month, ahead of a debut on the New York Stock Exchange slated for May 10, people familiar with the plan told the Financial Times.
The disappointing performance of Lyft shares has created an air of caution around the long-awaited IPOs of tech “unicorns”, which have been able to attract enough private capital to avoid tapping public markets for years longer than used to be the case. Lyft attracted significant short interest in the days after going public, as investors bet that its shares would fall.
In a sign of how companies may be tempering their expectations, Pinterest, the image-sharing platform, set a price range of $15-$17 for the 75m shares it plans to sell next week, setting up a potential “down round” with a valuation below its last private market fundraising.
The $100bn price tag Uber floated to its convertible debt holders is also lower than some forecasts. The company was valued at $76bn in its last private fundraising round.
The IPO paperwork Uber will make public on Thursday will give investors extensive details about its financial performance, competitive position, how it makes and loses money, and disclosures about its long history of legal and regulatory battles.
Uber has been reporting some financial results to investors for several years. Net revenue rose 43 per cent to $11.3bn on $50bn in gross bookings last year. Losses, excluding a paper gain from the sale of businesses in Russia and south-east Asia, narrowed to $3.3bn from $4.5bn in 2017.
Uber’s business stretches from car booking and food delivery on several continents to freight booking and experimental flying taxis, and it spends heavily on research into autonomous driving technology.
Some details of Uber’s IPO were first reported by Reuters and The Wall Street Journal. Uber and its lead underwriters Morgan Stanley and Goldman Sachs declined to comment.
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